If your using 2.1.x version and are using Distance grid collision then you must rebuild the rectangle every time it changes. If your using my SAT based collision then you should be able to simply change the vertex positions, but this is untested in both
cases as far as I know.

If your using 3.x version then you must rebuild the Fixture. This is a pretty fast operation, but it can slow down the Xbox, just like everything except drawing lol.

alright i got it working. just did sqrGeom.Dispose then recreated it, and its only happening at most 5-10 times in a second, not every step, any chance with 4 players resizing at this rate i'll have performance issues?

I wouldn't worry about performance until the frame rate drops to an unplayable level (< 30). But if you do start noticing problems you could pre-create a bunch of geoms, one for every ammo amount, and then you should have no problems with performance.
The Pooling demo in the AdvancedSamples shows a method of doing this.